Lockheed sees material effect of budget cuts on sales, earnings

March 01, 2013|Reuters

WASHINGTON, Feb 28 (Reuters - Lockheed Martin Corp, the Pentagon's largest supplier, on Thursday said its programs could be materially reduced, delayed or canceled if Congress does not avert across-the-board budget cuts due to take effect Friday, which would drive sales and earnings lower than projected.

If the reductions do take effect, Lockheed said its 2013 sales would drop more than the current outlook, which forecast a decline in the mid single-digit percentage range on the assumption that the automatic budget cuts would be averted.

Earnings and cash flow would follow a similar pattern, the company said in its annual report filed Thursday with the U.S. Securities and Exchange Commission. It said financial results in future years could also be materially affected.

Lockheed said 82 percent of its net revenues of $47.2 billion came from U.S. government customers in 2012, including 61 percent from the U.S. Department of Defense. The company reported earnings per share of $8.48 in 2012, up from $7.94 a year earlier.

Lockheed shares closed 33 cents lower at $88.00 on the New York Stock Exchange on Thursday.

In a separate development, the Pentagon on Thursday awarded Lockheed a $333.8 million fixed-price contract to pay for advanced procurement of materials needed to build an eighth batch of F-35 fighter jets.

In its daily digest of major weapons contracts, the Pentagon said the funds would allow Lockheed to buy long lead-time parts, materials and components for 35 jets that are due to be built the U.S. military, Britain and Norway.

Lockheed and the U.S. government reached an agreement in principle in December on the sixth and seventh production lots of F-35 planes, but are still working out the details of those contracts.

Negotiations have not yet begun about the eighth batch of jets, but the Pentagon regularly awards contractors funding to buy rare metals and other components that take a long time to procure.

(Reporting By Andrea Shalal-Esa; Editing by Leslie Adler and David Gregorio)